Novartis, Sun Pharma settle dispute over generic Gleevec

A Novartis logo is pictured on its headquarters building in Mumbai February 6, 2014.

Reuters/Danish Siddiqui/Files

ZURICH/MUMBAI (Reuters) - Novartis (NOVN.VX) won a seven-month reprieve from generic competition to its blockbuster leukemia drug Gleevec after reaching a settlement on Thursday with Sun Pharmaceutical Industries Ltd(SUN.NS).

Competition from copycat drugs is a major worry for the Basel-based drugmaker, which unveiled a series of deals worth over $25 billion aimed at strengthening its cancer business and exiting underperforming operations last month.

Novartis is looking to plug the hole left by the upcoming expiration of its patent for Gleevec with other treatments, as well as stave off generic competition to the lucrative drug for as long as possible.

Sun, which has tentative approval from the U.S. Food and Drug Administration for a generic version of Gleevec, is the most tangible threat to Novartis' drug.

The drugmaker missed first-quarter sales forecasts last month, blaming a slowdown in sales of the leukemia drug as well as generic competition for Zometa, a bone repair drug.

Under the settlement with Sun, that firm will be allowed to launch a generic version of Gleevec in the United States on Feb. 1, 2016, which gives Novartis seven extra months without the competition from the Indian firm.

The settlement is mildly positive for Novartis, according to analysts, although investors may have been hoping for a longer delay to Sun's product reaching the market.

"Whilst this settlement might not be as long a delay as some might have hoped for, it nonetheless should provide upside to current expectations," Jefferies analyst Jeffrey Holford said in a note to investors.

Novartis shares traded 0.2 percent lower at 79.90 Swiss francs following the ruling, compared to a 0.3 percent rise in a European index of drug stocks.

Trending On Reuters

Markets

The BSE Sensex posted its worst monthly fall in more than two years, raising concerns a strong rally that saw indexes surge in the fiscal year was waning due to concerns about stock valuations and a more gradual economic growth. Full Article